Shipping Companies Could Pay Tax To Use The World’s Busiest Shipping Route

Estonia’s Defense Minister Hanno Pevkur proposed that shipping companies may soon need to pay a fee to use the Baltic Sea, one of the busiest shipping routes in the world, to cover the high costs of protecting undersea cables.

This proposal comes after a series of violations, with several incidents involving ships damaging power and communications cables with their anchors. Some of these incidents are suspected to be acts of sabotage.

In response to the situation, NATO announced last week that it would deploy frigates, patrol aircraft, and drones in the Baltic Sea. This deployment will protect vital undersea infrastructure after ships cause damage to cables.

These damages have raised concerns of intentional sabotage, forcing NATO to increase its presence to ensure security.

Peunkur mentioned that countries are considering additional measures to protect the cables. These measures include installing sensors to detect anchors dragging across the sea floor and constructing protective casings or walls around the cables.

However, these efforts will come at a significant cost. Whether the governments or cable operators pay for the protection, consumers may eventually bear the expense through higher taxes or increased utility costs.

Peunkur also suggested another option: levying a tax on vessels sailing through the Baltic Sea. He compared it to the fees charged at airports, where passengers pay for landing and airport services as part of their ticket price.

Similarly, shipping companies might eventually pay a fee when passing through the Baltic Sea, which would act as an insurance fee for any damage caused to the cables.

Multiple options are being considered, but countries will need to agree on a common solution. The International Cable Protection Committee, based in the UK, reported that approximately 150 undersea cables are damaged globally every year.

The Baltic Sea, with its shallow waters and heavy traffic, is particularly vulnerable to such damage. Around 4,000 ships are estimated to cross the Baltic Sea daily, making the region’s cables, power lines, and gas pipes susceptible to incidents.

A Maltese-flagged ship was seized by Swedish authorities on Monday in connection with the damage caused to a cable running between Latvia and Sweden.

This incident is one of four similar breaches in the past year, also affecting cables running between Estonia and Finland.

While official investigations are still underway, Pevkur pointed out that the series of incidents appears to involve ships that are part of Russia’s “shadow fleet.” He said that these ships, though flagged differently, seem to be operating under a coordinated effort.

Moscow has denied any involvement and criticised the Western claims as “evidence-free.”

References: Reuters, Invezz

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